01/03/2016

Technical Analysis

EUR/USD GBP/USD USD/JPY XAU/USD

“EUR/USD grinding steadily lower is a function of inflation as well as Brexit, with both likely to keep pressure on the currency”. - Jefferies Group LLC (based on Bloomberg)

EUR/USD confirms uptrend to the downside

Level Rationale

■ R3 1.1201/27 Weekly R2; monthly R1

■ R2 1.1021/65 Monthly PP; 20/200-day SMAs; weekly R1

■ R1 1.0935/88 100/55-day SMAs; uptrend; weekly PP

■ S1 1.0852 Weekly S1

■ S2 1.0809/1.0771 Feb low; weekly S2; Bollinger band

■ S3 1.0709 Jan low

Sentiment Today Yesterday 5 days ago 10-day avg.

Open Positions 6% 2% 0% -2%

Orders (±50 pips) -10% -10% -16% -6%

Orders (±100 pips) -4% -16% -10% -6%

Indicator Day Week Month

MACD (12; 26; 9) Sell Buy Buy

RSI (14) Buy Neutral Neutral

Stochastic (5; 3; 3) Neutral Neutral Neutral

ADX (14) Sell Neutral Sell

CCI (14) Buy Neutral Neutral

AROON (14) Sell Buy Sell

Alligator (13; 8; 5) Neutral Sell Sell

SAR (0.02; 0.2) Sell Buy Sell

Aggregate ↘ ↗ ↘

Pair’s Outlook

Pessimistic inflation statistics from the Euro zone used to have a direct

negative impact on the Euro on Monday, even though the currency

attempted to remain above 1.0930 in the first part of the day.

Eventually, it closed at 1.0872 and kept the weekly S1 intact. The two-

month uptrend line is now violated and we are awaiting consolidation

today. Bullish hopes are being limited by both 55/100-day SMAs at

1.0935/67. In the meantime, a drop of EUR/USD under the first weekly

support is expected to cause another round of a sell-off down to the

February low of 1.0809 over the next 24 hours.

Traders’ Sentiment

The percentage of long positions in the SWFX market grew to 53% by

Tuesday morning, the highest level in almost 14 weeks. Pending orders,

however, continue betting on Euro’s decline in 52-55% of all cases.

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Tuesday, March 01, 2016 08:30 GMT

“Brexit risk has become more two-sided coin because of the size of the Brexit risk discount in the GBP, now that the discount is there, positioning and short-term valuation in GBPUSD indicate the strong possibility of a short squeeze”. - BMO Capital Markets (based on PoundSterlingLive)

GBP/USD in tight range between 1.38 and 1.40

Level Rationale

■ R3 1.4286 20-day SMA

■ R2 1.4141/70 Monthly PP; weekly R1

■ R1 1.4012 Monthly PP

■ S1 1.3791/15 Bollinger band; weekly S1

■ S2 1.3614/1.3557 Monthly S1; weekly S2

■ S3 1.3505 2009 low

Sentiment Today Yesterday 5 days ago 10-day avg.

Open Positions 26% 30% 42% 28%

Orders (±50 pips) 34% 18% 80% 33%

Orders (±100 pips) 18% 16% 40% 17%

Indicator/Period Day Week Month

MACD (12; 26; 9) Sell Buy Sell

RSI (14) Neutral Neutral Neutral

Stochastic (5; 3; 3) Neutral Neutral Buy

ADX (14) Neutral Sell Sell

CCI (14) Neutral Buy Buy

AROON (14) Sell Sell Sell

Alligator (13; 8; 5) Sell Sell Sell

SAR (0.02; 0.2) Sell Sell Sell

Aggregate ↘ ↘ ↘

Pair’s Outlook

The British Pound succeeded in outperforming the US currency at the

beginning of the week, thus, retaking the 1.39 major level. Today the

Cable remains caged between the weekly PP at 1.4012 and the cluster

around 1.3750, represented by the Bollinger band and the weekly S1.

However, technical studies retain their bearish signals, suggesting that

the pair could erase some of yesterday’s gains. Nevertheless, there is

still room for more than a 90-pip rally towards the nearest resistance,

in case the Buck loses significantly more long positions later.

Traders’ Sentiment

The percentage of Sterling long positions open in the SWFX market

keeps oscillating between 63% and 65%, with the lowest of the two

prevailing today. At the same time, the share of buy orders barely

changed—increased from 58 to 59%.

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Tuesday, March 01, 2016 08:30 GMT

“As expected, the G20 meeting did not result in big changes and it's now easier to buy the yen. There were no strong policy statements - they merely reiterated that competitive currency devaluations were not a good thing - and the yen appeared a good bargain after last week's slide”. - BBH (based on Reuters)

USD/JPY attempts to regain the bullish momentum

Level Rationale

■ R3 114.96/115.04 Weekly R1; monthly PP

■ R2 113.96 20-day SMA

■ R1 113.00 Weekly PP

■ S1 112.01 Weekly S1

■ S2 110.66/05 Bollinger band; weekly S2

■ S3 109.06/108.60 Weekly S3; monthly S1

Sentiment Today Yesterday 5 days ago 10-day avg.

Open Positions 44% 40% 48% 43%

Orders (±50 pips) -22% 58% -12% 0%

Orders (±100 pips) 4% 30% -64% -15%

Indicator/Period Day Week Month

MACD (12; 26; 9) Sell Buy Sell

RSI (14) Neutral Neutral Neutral

Stochastic (5; 3; 3) Neutral Buy Neutral

ADX (14) Neutral Sell Sell

CCI (14) Neutral Buy Buy

AROON (14) Sell Sell Sell

Alligator (13; 8; 5) Sell Sell Buy

SAR (0.02; 0.2) Sell Sell Sell

Aggregate ↘ → ↘

Pair’s Outlook

As was anticipated, the USD/JPY currency pair weakened on Monday

and pierced the immediate support area; however, the second target at

112.00 was not reached. Even though demand for the safe haven Yen

remained strong earlier today and pushed the pair closer to the now

immediate resistance—the weekly S1 at 112.01. Investors appear to

have regained some confidence in the Buck, helping the pair recover

from intraday losses on the moment of writing, but the resistance at

113.00, namely the weekly PP, if not to contain the volatility, then

could keep the Greenback from appreciating. In case of a breach, the

pair could potentially even reach the second resistance around 114.00.

Traders’ Sentiment

Today 72% of all open positions are now long, compared to 70% on

Monday. Meanwhile, the number of buy orders slid from 65 to 52%.

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Tuesday, March 01, 2016 08:30 GMT

“Weak data globally is adding to concerns over a slowdown and that is helping gold”. - a bullion trader in Hong Kong (based on CNBC)

Gold picks up and eyes February highs

Sentiment Today Yesterday 5 days ago 10-day avg.

Open Positions -38% -46% -40% -42%

Indicator Day Week Month

MACD (12; 26; 9) Sell Buy Buy

RSI (14) Neutral Neutral Neutral

Stochastic (5; 3; 3) Neutral Sell Neutral

ADX (14) Buy Buy Buy

CCI (14) Sell Sell Neutral

AROON (14) Buy Buy Sell

Alligator (13; 8; 5) Buy Neutral Sell

SAR (0.02; 0.2) Buy Buy Buy

Aggregate ↗ ↗ →

Pair’s Outlook

Monday has been a green day for the bullion, which bounced off the

February uptrend and spiked towards the 1,240 mark. Tuesday sees a

continuation of the bullish tendency, which is estimated to lead to a

testing of the first weekly resistance at 1,249. This one is guarding the

February 24 high at 1,253 and the multi-month high at 1,263. Growth

beyond the latter is unlikely throughout the next 24 hours, unless there

is any heavy shock from external economic factors. However, daily

technical indicators do not abandon their optimistic stance, meaning

general sentiment prefers a rally to a bearish correction.

Traders’ Sentiment

Market participants that are betting on gold’s rally began returning to

the marketplace and pushed their respective share of total open

positions to 31% from 27% yesterday. For the first time in five days less

than 70% of all SWFX traders are short on the bullion.

Level Rationale

■ R3 1,277 Weekly R2

■ R2 1,261/63 Feb high; Bollinger band

■ R1 1,249 Weekly R1

■ S1 1,225/20 Weekly PP; uptrend

■ S2 1,205 Monthly PP; 20-day SMA

■ S3 1,199/94 Weekly S1; uptrend

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Tuesday, March 01, 2016 08:30 GMT

Signals Buy – the pair shows a clear uptrend Sell – the pair shows a clear downtrend Neutral – no specific trend for the pair Chart SMA (55) – Simple Moving Average of 55 periods SMA (200) – Simple Moving Average of 200 periods Indicators MACD – Moving average convergence divergence – momentum indicator RSI – Relative strength index – compares the magnitude of recent gains to recent losses in attempt to determine ‘overbought’ and ‘oversold’ conditions of the asset Stochastic – technical momentum indicator that compares a currency pair’s closing price to its price range over a given time period ADX – Average directional index – trend strength indicators CCI – oscillator used in technical analysis to help determine when a currency has been overbought or oversold SAR – trending indicator – shows the direction of a trend AROON – measures strength of a trend and likelihood that it will continue Alligator – trending indicator demonstrates presence of a trend and its direction Forecasts

Third Quartile – separates 25% of the highest forecasts

Second Quartile – the median price based on the

projections of the industry

First Quartile – separates 25% of the lowest forecasts

EXPLANATIONS

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